The Great Inflation Undershoot

A number of central banks are increasingly worried about deflation. Little wonder. Inflation’s been falling almost everywhere.

Consumer price rises are below target across much of the developed world. Most major central banks aim for a 2% inflation rate. But they’re failing to reach it across most of Europe and in the U.S.

And while inflation is running warm in a number of emerging economies, here too the recent trend has largely been downward.

Indeed, among a raft of economies where inflation has been falling during the past year, Japan was a notable exception, registering a strong jump in CPI, largely thanks to Abenomics and its negative impact on the yen.